Shifting Shares (16 Sep 2019) – Big Cups #FEVR #FUTR #TMO
Accrol Group (ACRL)
Accrol had a big spike on Friday. There wasn’t much volume behind it, and I don’t know why anyone would want to buy this, but someone did. I did think about fading this piece of trash, because there didn’t seem to be any conviction behind the move (lack of significant volume), but decided to leave it.
(All charts taken from SharePad and ShareScope.)
Early morning trading shows that that would’ve been a good idea.
Alfa Financial Software (ALFA)
One piece of trash that I did fade this morning, was ALFA. This stock has been a serial disappointer since it listed (familiar story?).
I made a rookie error of shorting this on the bell, only to find myself quickly stopped out. Today’s RNS gave plenty of existing shorters a gap down with which they can then bank their profits. It’s important to be aware not just of the chart, but other market participants too.
Charts do give helpful indicators of price action, but what I should’ve done is wait for shorters to close their positions, monitor any movements in price, and then see what happens.
Given the big jump in price I’ve decided to short the spike and use a stop above the day’s high. I think this goes lower, and there may be an opportunity to sell more as it goes through the low.
Amiad Water Systems (AFS)
This is not the most liquid of stocks but may be setting up for a trend.
This looks like a very big cup and handle going on back from 2014. I like cup and handles, and we don’t see them much in this market, but with the stock currently offered online at 250p-270p it’s not one where traders can take a serious position. But these are the stocks which can motor due to their illiquidity, so it’s worth being aware of a few of them.
Transense Technologies (TRT)
This is another illiquid minnow (12 million market cap) but it has the potential to be a multibagger (over time – not tomorrow, sorry!) as all of the moving averages are now pointing upwards. The trend has been intact for a few months and it’s poised to break out of the recent high.
Looking closer, we can see it’s sat on a 52 week closing high.
The company has a tyre-monitoring technology that does… Actually, I don’t know – but Bridgestone are happy to collaborate with Transense, and they are a big name in tyres.
This is the type of company that I think can offer attraction for long term trend followers and investors. It’s clearly underresearched, and unloved. That means that there is no hype or heat in the price, and if the fundamental strength of the business improves, more and more people could begin to buy.
Time Out (TMO)
I intensely dislike this company based on its obscene executive remuneration, but the stock is approaching an all time high. My personal belief is that they are going to run out of cash very soon, so I’d look out for the half-yearly report and see what they say. They were burning through it at a horrific rate, and so we’ll see what the numbers say.
Andrew Sykes (ASY)
I have covered this stock as a potential buy, but now reverse that decision and say it is a potential sell.
The trend has been up since 2016, but with the stock faltering we can see that if it breaks the 200 moving averages it may be in trouble. The market makers certainly aren’t interested in dealing with this stock, because the current quoted spread is 600p-650p!
The problem in bad markets is that there is less liquidity, and because there is less liquidity, the spreads on stocks can become wider, which then results in less liquidity. It’s a vicious cycle. Investors often like to complain about traders but the facts are it’s these traders that narrow the spreads on stocks and make these stocks more attractive to deal in. I’ve never understood why investors bemoan traders, because investors should be thinking long term, unlike traders who may literally be thinking of closing their position that same day.
I am still keeping an eye on the old darlings – and I do believe Fevertree will issue a profit warning in the next two years. It’s struggling with the 100 EMA, getting near and then selling off.
The reason why I think that it will issue a profit warning is because these earnings upgrade cycles rely on increasing expectations and then the company beating them. So, whilst the company has picked the low hanging fruit in the UK, the US will be much tougher to crack.
Coca-Cola have introduced their own premium mixer. Coca-Cola have the clout and power to be able to out-muscle little old FeverTree should they begin to make a bit of noise. Coca-Cola already have the distribution and logistics set in place. It’s not going to be easy in the UK because although Schweppes and Britvic were caught napping, Coca-Cola won’t be such a pushover.
Of course, there is always the argument that Coca-Cola will simply acquire FeverTree, but unless FEVR start to do some damage in the US I can see Coca-Cola just swatting them away. I guess we’ll see eventually, but if the price gets near the 2000p mark again I’d be tempted for a short.
This is an ex-holding of mine, which now appears to have closed the gap. If you’re a gap trader, then this could be a good entry. As I’m not, I’ll wait for the breakout.
Earnings appear to be turbocharging ahead here, and I think there is more to come from the company. It’s done very well for me and many other holders, and that trend could easily continue. It’s tech, so it’s hugely scalable – just don’t ever put too much into one stock.
We have seen that recently with accounts being blown on a regular basis now, almost weekly, because too many people don’t consider that the unthinkable can happen.
Always position size for 100% loss. Because one day – it will be.